(EnergyAsia, August 22 2013, Thursday) — The Nigerian government is pushing for a showdown with the oil majors amid accusations that the companies are involved in organised theft and corruption followed by threats to revoke the award of a major offshore block.

Last month, a top adviser to the President said the majors were complicit in an elaborate scheme by their staff and local members of the main Niger Delta oil producing region to steal up to US$6 billion of crude a year.

Kingsley Kuku told the media that the theft can only be operated by well-connected individuals in industry and government who have the expertise to handle, process and market the oil with the protection of local security forces.

Describing the loss as a serious threat to the national economy, he said gangs have been stealing crude oil from designated points in pipelines along the coast and processing them in illegally established refineries.

The crude and products are mostly shipped out to international buyers, leading Kuku to charge that the theft is being organised by foreigners with access to vessels and contacts.

As much as 400,000 b/d are lost to theft and pipeline sabotage, according to Ngozi Okonjo-Iweala, Nigeria’s Coordinating Minister for the Economy and Finance.

Calling this an “international crime”, adviser Kuku accused the majors of not monitoring their contracting, procurement and distribution processes in allowing the losses to continue. The government of President Goodluck Jonathan has recently begun to raid and demolish illegal refineries as part of its campaign to stamp out oil theft.

Ironically, Shell, Exxon Mobil, Chevron, Total and ENI which help produce the bulk of Nigeria’s oil have also been complaining about rising losses as a result of theft, corruption and terror attacks.

Separately, a Nigerian parliamentary committee has called on the government to revoke the 2011 award of an offshore oil block to Shell and ENI due to allegations of corruption. The majors jointly paid US$1.1 billion to Malabu Oil & Gas Ltd, a company controlled by former oil minister Dan Etete, for the right to explore block 245 off the Gulf of Guinea, said to contain more than nine billion barrels of crude reserves.

Nigeria’s worsening security threats could undermine the government’s plan to raise oil and gas production and reserves as part of its long-term goal to grow the economy. Oil accounts for 95% of the country’s export earnings and 80% of government revenues.